UBS has upgraded Watches of Switzerland Group PLC (LSE:WOSG) to 'buy' from 'neutral', citing accelerating demand for luxury timepieces in the United States.
The bank raised its price target to 850p from 600p, implying upside of about 16% from the closing price of 730p on 1 July.
Watches of Switzerland is a luxury watch retailer with roughly half its sales in the United Kingdom and half in the United States.
UBS analyst Zuzanna Pusz, who takes over coverage of the stock, said the retailer had repeatedly beaten market expectations in recent months.
That momentum has been driven by resilient demand for Rolex, which accounts for more than half of group sales, and by accelerating trends across other high-end brands such as Cartier.
The bank now forecasts constant-currency sales growth of 10% in the financial year to April 2027, ahead of company guidance and the market consensus.
It expects the United States, which became the group's largest market this year, to drive most of that growth.
UBS argued the company is relatively insulated from the wider luxury slowdown thanks to its lack of exposure to China and its high-end positioning, with an average selling price of around £8,000.
The bank also pointed to scope for further acquisitions, noting that the American luxury watch retailing market remains highly fragmented and dominated by family-owned independents.
Pusz said the group's continued growth had eased longstanding investor concerns tied to Rolex's 2023 purchase of rival retailer Bucherer.
That deal had prompted a de-rating of the shares, but UBS believes the discount to the company's historical valuation is no longer justified.
The bank's new target restores a price-to-earnings multiple of around 15 times, broadly in line with the stock's long-run average.
UBS named a US luxury market slowdown, a stock market correction and Rolex brand fatigue as the main risks to its more positive view.
The shares rose 7p to 736.5p.
